Research On Marine Insurance Warranty

In marine insurance, the insurer and the assured sometimes choose to incorporate a special term when concluding their insurance contract. Such term normally subjects the assured to undertakings by which some particular thing shall or shall not be done, or that some condition shall be fulfilled, or whereby the assured affirms or negatives the existence of a particular state of facts. Such term is called promissory warranty under Marine Insurance Act 1995. Under the Act, breach of a promissory warranty shall bring the insurance contract to an end. The harsh legal consequence of breach of warranty bases on the information asymmetry.At that time, the assured is dominant in marine insurance market. However, the growing market together with the developing communication media and internet database technology change the circumstance. The insurer become more professional and is easier to collect information of the assured and the insured ship. The assured has lost his ascendancy and it is unfair to stick to the old system. Therefore, many states try to modify the legal consequence of application of warranty by official and private codification.China?s Maritime Law Article 235 provides that where the assured has not complied with the warranties under the contract, the insurer may terminate the contract or demand an amendment to the terms and conditions of the insurance coverage or an increase in the premium. However, there is no articles that define the term “warranty”, or clarify the elements of breach of warranties, or the exceptions of warranties. Lack of legislation leads to discrepancy even contradiction in judicial judgements, where special terms in insurance contract are recognized as warranties.The marine insurance warranty system derives from United Kingdom. To study the history of warranty under UK system will contribute to deep understanding on the nature of warranties. To study the reflection and reform under UK and other states will contribute to making proper options when we transplant the system of warranties.